Over a third (35%) of entrepreneurial Britain said they would resort to their own personal savings when starting or growing a business, new research commissioned by crowdfunding specialist Crowdfinders has found. The second most popular option in the nationally representative survey of over 2,000 UK adults was banks and institutions (28%). Whereas, 15% – the equivalent of almost 8 million people across the UK – stated they would seek financial support from friends and family. Worryingly, however, almost two thirds (64%) of business-minded Britain said those close to them do not have the means to support their business venture.
The research revealed that huge numbers of Britons are in the dark about the funding options available to them, with a particularly worrying 52% of our next generation of entrepreneurs (those aged 18-34) saying they would not know where to turn for financial support if they were to start or grow a business. Coupled with the fact that 64% of UK adults cannot rely on financial support from friends and family, these are troubling findings for the future performance of the nation’s economy, which is heavily reliant on a growing collection of small and medium sized businesses.
Analysis by Funding Options has revealed that since 2011 banks have withdrawn £5.7 million a day in small business overdrafts alone, thereby cutting available credit by £8.4 billion at an estimated cost to the economy of £2.9 billion. The financial shortfall is having a profound impact on Britain’s SMEs, with RSA figures showing that over half of UK businesses are failing within the first five years as a result. This issue affecting UK SMEs has come into the spotlight recently with the announcement of the Patient Capital Review in Philip Hammond’s first Autumn Statement – the review seeks to identify the causes of the funding gap by partnering the insights of the Treasury and leading figures in the private equity industry.